Yesterday’s post about Quitclaim Deeds of Real Property has spurred a few variations of the same question: what happens to liens on my property when I transfer it to somebody else?
With only a few exceptions, a sale of property is subject to any properly perfected lien that is attached to the property. So, if I quitclaim land to you, then any liens on that land remain attached to that property, and I take it subject to those unpaid liens. Long story short, conveying your house to your mother doesn’t make the mortgage go away…it just means your mother owns a house with your mortgage on it.
So, as a buyer, it’s my duty to investigate the status of liens on any property that I’m buying and make sure that those liens are paid off or otherwise released (or that I’m content taking the property with the liens). A smart buyer will not only investigate the status of his seller’s title to confirm it’s lien free, but will also look a few “sellers” back, to make sure there are no liens.
From a creditor’s perspective, there is comfort knowing that a valid and recorded lien serves as protection of its rights, and the creditor doesn’t need to watch the property transactions on a daily basis.
For a buyer, only a complete review of the title records can provide comfort.